Apr 27 Value Propositions - Case Studies Part One

There’s an old expression in marketing:“People don’t buy products, they buy states of being”

It’s true, products and services are boring.Features and specifics are boring.What’s interesting is what it can do for you.

What gains can this create?What pain can it relieve?

Develop the skill of seeing the world through this lens, and you’ll be able to build compelling value propositions for your customers, which is what ultimately creates revenue.Let’s look at some real-world examples:

What they sell is status, the type of class that money can buy.I’ve heard it said that corporate women in China want a Louis to prove to their peers that they can afford one.That may sound insane, but there’s clearly a market for it.

The customer didn’t start out by saying“Gee, I don’t have anything to hold all of my stuff when I’m out…if only someone sold a handbag…I’d happily pay $6,500 to solve this predicament I’m in…”That’s why Louis doesn’t sell itself as the most practical or functional bag.It sells an image, a lifestyle, success and prestige.

Clearly it works, look at the knockoffs. Why do people buy fake Louis in Bali?Better yet, these people probably aren’t Louis’ target customers, so why do Louis care that they’re buying fakes?Because it diminishes the exclusivity of the brand. The idea that the brand means something is what enables Louis to charge so much.Look at Burberry, their famous check pattern started appearing everywhere, becoming a “Chav Icon”, and sales plummeted.

That’s how you can spot the real value proposition; what will the brand defend to the death?

Image: TOMS Shoes

TOMS Most people in the Social Enterprise world are familiar with TOMS.Odds are, you either own a pair, or have a strong opinion on their aid model that makes you not much fun at parties.

TOMS sell basic shoes for around $70, but that’s clearly not all they sell.The shoes come with a story; the story of how your purchase also enables TOMS to give a pair to a person in the developing world.One for One.

It’s a catchy idea, easy to understand, and a story that’s easy to share.That’s TOMS’ appeal; if those shoes were sold under another name, minus the story, there’s no way they’d command $70, or a loyal following.

For some people, their concern around ethical fashion is something that genuinely pains them. TOMS feel guilt-free, and that’s the pain reliever.

For others, the shoes give them the gain of a talking point, a great way to share the idea of a social enterprise with people unfamiliar with the term.They also might just happen to like the look of the shoes.

Image: Collingwood Football Club

Collingwood Football ClubSome international readers may not be familiar with Collingwood, the Australian Football League team with the most supporters, and the most haters.They are the butt of most footy jokes, traditionally working class and have the most rowdy supporters.Think Oakland Raiders, or Arsenal, or Brazil at the World Cup.

A few years back, Collingwood came out with their annual bumper sticker that boldly proclaimed “It’s us against them”.

It stated what the club has felt for a century, the outsider, rough as guts, dark horse club that inspires more emotion (love or hate) than any other club.

I am not a fan, but I see why they’re so popular and wealthy.There’s something magnetic about them; you’re either strongly attracted or strongly repelled. Families will be “Collingwood Families”, and it becomes part of your identity.

When you buy a membership, you don’t just get a scarf and access to games, you join a tribe, a big (ugly) family with a proud heritage.Like it or not, that’s clearly appealing to a lot of people, and good on Collingwood for creating something so meaningful.

UberUber has popped up pretty recently, and aren’t Gen Y in love with them!Uber have built a loyal following; I know I’ve caught myself becoming their accidental spokesman during dinners with people over the age of 50.So what is the appeal?

Let’s look at the pain relievers; no cash required, no waiting blindly for a cab, no traditional taxi or taxi driver.

I think part of the charm comes from the cashless side.The danger of PayPal is that the purchase doesn’t feel painful in the way that cash does.Handing over two $20 bills hurts at a neurological level (fires the pain receptors in your brain), whereas seeing a $40 charge on your account doesn’t.

In Australia, there’s also some casual racism lying around, and the stereotypical taxi driver is seen in a poor light.Uber have accidentally addressed that pain point, and people have responded positively.I wish that wasn’t the case, but I’ve seen it come up time and time again.

So, why do people buy from you? What are they really looking for?

For more of the Value Propositions Case Studies series;Part Onefeaturing Louis Vuitton, AFL, Uber and TOMSPart Twofeaturing Nespresso, Heineken, and Shoes of PreyPart Threefeaturing a variety of Men’s Watches and Chocolate brandsPart Fourfeaturing the classic iPod ads, Whiskey, Hardware, Butter and Barossa TourismBeing The Bestexplores how companies frame themselves as industry leadersBeing The Cheapestcovers strategies for demonstrating value for moneySocial Proofexamines how brands make themselves look popular and trustworthyColognelooks at how intangible gains are conveyed through imagery and designBottled Watercompares ten brands selling the same product in different ways